Suppose today is May 1, 2014, and your firm produces breakfast cereal and needs 75,000 bushels of corn in July 2014 for an upcoming promotion. You would like to lock in your costs today because you are concerned that corn prices might rise between now and July. Each contract is for 5,000 bushels; the settle price for July 2014 is $5.19 per bushel.

Question 1:

How many contracts do you buy?

Question 2:

What total cost would you effectively be locking in based on the closing price of the day? (Round your answer to the nearest whole number, e.g., 32.) Total Cost = $______

Question 3:

Suppose corn prices are $5.06 per bushel in July. What will your cumulative mark to market be? (Do not round intermediate calculations. Enter your answer as a positive value if a profit or as a negative number if a loss. Round to the nearest whole number, i.e. dollar, e.g., 32.)

Cumulative MTM = $______